Short essay on frequent power cuts in India

Electric energy occupies the top grade in energy hierarchy. It finds innumerable uses in home, industry, agriculture and even in transport. The fact that electricity can be transported practically instantaneously, almost pollution-free, at the consumer level and that its use can be controlled very easily, makes it very attractive as compared to other form of energy.

The per capita consumption of electricity in any country is; index of the standard of living of the people in that country. As per the latest figures, the annual per capita consumption of electrical energy in some of the countries is: USA—11,700 kwhr, Canada—16,100 kwl Japan—6,900 kwhr, UK-4,200 kwhr, Russia-5,100 kwhr and India – 400 kwhr.

The electric energy demand in India during the past 20 years was higher than the gross generation as a result of which there were massive power-cuts. It has been estimated that an investment of about Rs. 3, 00, 00 crore would be needed in India in the next decade to add new generating capacity for keeping a balance between supply and demand.

Indian energy scenario today is dominated by feelings of discomfort and despair regarding the abysmally poor supply of power in most parts of the country. There are several issues that characterize India’s energy scenario today. These can be briefly listed as follows:

The present installed capacity in our country is about 93,000 MW (1998-99) and the largest share in power generation is contributed by thermal power plants, which account for about 78.7 percent of the total power generated in country. Hydel power contributes about 18.5 percent while nuclear power accounts for only 2.7 percent. The rest being accounted for by diesel, wind, solar and gas plants.

Against the present installed power capacity of about 93,000 MW, the power actually available for transmission is about 54,000 MW. After theft and pilferage, power available for consumption at the final stage is less than 32,000 MW. This means only 35 percent of the total generation capacity is being effectively metered and used. In the case of thermal power plants in Bihar, the efficiency level is below 20 percent.

The average transmission and distribution (T&D) losses for India is rated over 27 percent with a maximum individual proportion of loss being as high as 52 percent for Jammu and Kashmir whereas for developed countries this rate is less than 10 percent. In absolute terms, UPSEB tops the list with a total T&D loss of 6.96 billion kwhr.

In fact, vast T&D network for the widely dispersed localities in difficult geographical areas, abrupt theft or illegal use of power, inefficient equipment are the main reasons for such a high loss.

The managerial efficiency and financial health of several energy supplying organisations in the country are very weak. For instance, the State Electricity Boards (SEBs) in the country reached a mind-boggling level of financial losses totaling Rs. 9453 crores in 1996-97. Mounting dues of various power boards can be gauged from the following figures of their debt:

NTPC – Rs. 11,000 crore, HPCL – Rs. 3,000 crore, BHEL – Rs. 2,500 crore, Powergrid – Rs. 1,000 crore Total – Rs. 17,500 crore.

The financial health of the SEBs is woefully poor mainly because pricing of power, particularly for agricultural consumers, is far below even the average cost of supply. At the same time, the power tariff to industry and commercial sector at the rate of Rs. 4-5 per unit has already become the highest in the world.

So, despite impressive growth in power generation, power shortage still continues in our country. In 1980-81, gap between demand and supply of power was 12.6 percent. It came down to 6.1 percent in 1984-85 but again rose to over 13 percent in 1993-94. In States like Tamil Nadu, Punjab, Haryana and Maharashtra, the power-cuts are very severe.

Some of the reasons of the power shortage are as under: 1. Faulty Planning, 2. Sharp increase in demand, 3. Delay in construction of power projects, 4. Inter- State disputes, 5. Erratic monsoons, 6. Plant outages due to poor quality of power plant equipment, improper operation and maintenance, 7. Transmission losses, 8. Shortage of coal, 9. Poor utilisation of generating equipment.

The abysmal power scenario has, of late, ringed the ears of government policy-makers also, because of which they opened the doors for the private sector participation in power generation in 1991-92. In addition, government has announced a mega power policy in which several sops are proposed to be offered to the pioneering power companies in the form of tax benefits, import duty concessions, tax holiday, deemed export status for indigenous suppliers etc.

The fact remains that much of government’s attention and investments are directed towards the generation sector, which is not such a great idea. As it is, losses in transmission and distribution ought to have been the priority.

Also the government has proposed a 2000 MW power station each at North Karanpura, Bash and Talcher apart from 4000 MW Hirma in eastern region which are already surplus in energy due to unhealthy industrial environment and extremely poor distribution system So, the projects would result in costly transmission.

Thus, there appears to be a complete confusion in so-called power reforms as there is no clear- cut demarcation of responsibility among the centre, Sates and private sector. For example, why are Central undertakings planning large installed capacity when States have not made any commitments to purchase this costly power?

To counter this, the Government in 1999 called Mr. Arthur Anderson who recommended a 4-phase restructuring for SEBs which includes unbundling of SEBs, into generation, transmission and distribution setups and then privatisation of all of these gradually. It is because of the government’s effort, after all, that reforms have been carried out in Andhra Pradesh, Haryana, Gujarat, Orissa and Karnataka and we hope that in future the ills of system especially the cynical maneuvering of politicians will be diligently handled.

We at present are sitting at the threshold of development and for that an uninterrupted power supply is a bare necessity, as energy has been called the fuel of economic progress and the ready availability of cheap energy serves to stimulate industrial development. In fact, now we remember with disbelief, the father of electricity. Thomas Alva Edison saying, “I will make electricity too cheap that only rich can afford a candle”.

That no doubt is a distant dream but nonetheless we can try to achieve a certain minimum level in all these spheres by adopting certain measures as stated hereunder.

(1) Power thefts be controlled creating a specific full-fledged policing department. This department can be trained for the job. Legal authority and responsibility for controlling theft of power should be vested with this department only.

(2) The generation system has expanded enormously during the past 2 decades. However, the expansion of transmission and distribution has not kept pace with the expansion of generation system. As a result, T&D system is overloaded, resulting in high losses. Expansion and computerised design of the T&D system is the need of the hour.

(3) Failure with traditional technology should give way to new technology should give way to new technology and India should be bold enough to give them a try even if none other has gone for it.

One such breakthrough technology is inducting or micro-turbines using natural gas that could enable individual households and shops to generate their own power cheaply, keeping grid as a backup.

Another such technology would be the construction of a Km long tower with saline or brackish water being poured from top so that as it hurtles down, the water reaches velocity of 70 km/h, good enough to drive turbines and generate electricity. Apart of this electricity would be used to pump water up and the remaining be utilised for consumption.

(4) The State governments are a great hurdle in such innovative projects, which do not permit them to come up; rather they are banning the existing ones. The reason behind this is their fear that if these are allowed, the new power stations coming up will remain idle. Public should raise voice against such violation of Constitutional rights. New technology promises to empower the consumer with power. Let no government come in the way of such empowerment.

(5) The financial health of SEBs is woefully poor and unless State governments set up independent regulatory bodies, change will be tardy and inadequate at best. The first such experiment in independent regulation of electricity prices was carried out in Orissa and has made significant progress. Haryana is following Orissa’s example but has yet to carry out a major restructuring.

(6) There is a need to restructure energy supply in such manner as dependence on imported oil particularly from the small region of the Gulf is minimised. This would require diversification of sources of import and perhaps major efforts to acquire ownership in other parts of the world. Another option will be to actively pursue the possibility of imports of gas from countries having abundant resources.

(7) Significant efforts need to be made to harness growing share of renewable energy resources like wind, sun, biomass, etc. along with rapid development of low cost and efficient technological solutions.

While much is happening by way of renewable energy research in other countries, India has a far greater stake in the field than most other countries of the world particularly since we have a substantial endowment of renewable energy resources in the country.

(8) Our country does not have an integrated energy policy. Integration does not imply state control or centralised planning of every energy decision, but what is certainly required is an integration of outcomes related to energy and a policy framework that takes into account the effects of decisions related to one form of energy on all the others.

The most important element missing from present policy in the lack of a long- term vision and a strategic direction in the country’s energy policy. This suggests that energy policy needs to be elevated to a higher level in the articulation of economic policy for the country and a stronger strategic dimension being developed to move initiatives in the right direction.

This would require such greater public awareness of the choices available beyond the immediate constraints that seem to dominate our concerns today.

(9) Salvation of power sector, no doubt, lies in privatisation. However, the wrong government policies discourage this process. Besides, labour laws, overstaffing, cost of assets etc., too hinder privatisation. The ding- dong game, in first approving, then rejecting and finally reapproving the Enron-financed Dabhol Power Project in Maharashtra, has, in fact, fuelled fresh debate on what is undeniably an example of India’s debris littered road to liberalisation.

If corporate can publish unaudited quarterly report for the information of shareholders, why could not this practice be applied to power industry also?

A newspaper quoted Mr. Daniel Adamson, Deputy Assistant Secretary for Power Technology of US Department of Energy as saying that the first wave of competition in electricity is giving consumers a choice of power supply. The next wave is to give them the choice to generate their own power. India is still struggling to get towards the first wave.

It first allowed private generation but only within the ambit of SEBs monopoly in distribution. Now, Orissa, Haryana and others are thinking of privatizing electrical distribution. We need to go further towards creating a multitude of distribution channels so that a true market can emerge where electricity is traded like potatoes. Government rules do not determine who can produce potatoes at what price, and then provide guarantees, counter-guarantees and other props to ensure profitability; instead a multiple of potato producers and consumers interact in market.

Electricity needs to go the same way. Today, there is no such flexibility because the supposed liberalisation in the energy sector is not even quarter baked.

China too had started its liberalisation programme way back in 1979 but positive results did not come about till later half of the 1980s. Similarly, in case of India, which started its liberalisation agenda in 1991-92, it has only been just eight years. In fact, the itch is just getting over and the real action starts now.